Analysis of Lufthansa Airlines Marketing Strategy

The Lufthansa Group is a globally operating aviation group with a total of more than 550 subsidiaries and affiliated companies. The company portfolio consists of network airlines, point-to-point airlines and aviation service companies. For Lufthansa Airlines to compete effectively in the airlines industry, it has to invest in smart marketing campaigns. This paper analyzes the marketing strategy of Lufthansa Airlines using various marketing principles.

Target Market

The target market of a company defines the specific types of consumers that the company should serve in order to achieve its main objectives. The target market is chosen by categorizing consumers into groups based on age, income, demographics, geographic location, lifestyle, attitudes, opinion and family life cycle (Hill & Jones, 2012). Lufthansa Airline has five segments: passenger airline group, logistics, Maintenance Repair Overhaul, Catering and IT services (Lufthansa Airlines, 2014). The target market for passenger airline group is travelers who tour or travel on holidays and visit families and friends. This group does not have a specific target age group; it is just based on people’s lifestyles. Logistics segment targets business people who transport cargo across various destinations. This group of customers often minimizes transport costs since they are businesses; and since the aviation industry is competitive, Lufthansa offers fairly low prices to this group of customers. Other customers of the market are other airlines which require maintenance services for their fleet.

Positioning

Positioning involves targeting the value propositions of consumers in the target market. In this case, a company may position itself strategically to meet the needs of the target customers. Lufthansa has positioned itself in a leading position in Europe in terms of passenger capacity. The company wins passengers and meets their needs by offering travel class with great comfort and enhanced service. The company also focuses on organic growth to accommodate more passengers travelling on holidays and other travel arrangements. For instance, the company will add up to 23 more ultra-modern aircraft in the year current year 2014 (Lufthansa Airlines, 2014).

Innovation and focus on service quality are the main positioning strategies for the airline company. Lufthansa focuses on offering warm and stylish service to customers. The company also offers enhanced airfreight services for business people with fair prices in order to meet the cost needs of the customers. In order to achieve this, the Lufthansa concentrates on fuel efficiency in order to reduce its costs of fuel and offer low prices to its airfreight customers. Airfreight and special cargo services are also positioned by the company through strategic alliances. Another important aspect of Lufthansa’s positioning is product portfolio – the company offers several product lines including catering for the Lufthansa Group airlines and other airlines.

Products and Services

Lufthansa Airline offers a portfolio of products and services categorized in five segments: passenger airline group, logistics, Maintenance Repair Overhaul, Catering and IT services (Lufthansa Airlines, 2014). Lufthansa passenger airline services are the main products of the company and form important business segment in which the company concentrates its competences to earn benefits. The main product strategy for this business line is the multi-hub strategy which consists of five hubs (Frankfurt, Zurich, Munich, Brussels and Vienna) that enable the passengers to make their own travel choices. The company also has seven brands for its passenger airline services including Austrian, germanwings, jetBlue, SWISS, SunExpress, and edelweiss (Lufthansa Airlines, 2014). SWISS and Australian airlines operate as a group and enhance synergies through cooperation. Lufthansa Airlines also operates its product portfolio in a structured manner and harmonises its processes to give customers quality products and services.

The company also offers international airfreight services through its logistics segment. This includes standard freight, express freight and special cargo (Lufthansa Airlines, 2014). These services are offered for temperature-sensitive shipments, perishable commodities, airmail, and live animals. The products are transported from airport to airport where the bulk of freight is transshipped from Frankfurt air cargo hub (Lufthansa Airlines, 2014).

Pricing Strategy

The main pricing strategy for Lufthansa Airlines is a cost-based strategy whereby prices are set in a position above the costs of production, operation, and distribution. The amount above these costs reflects the return on risk (Hill & Jones, 2012). However, the company focuses on low pricing in order to obtain competitive advantage in the highly competitive aviation industry. This is achieved by cutting on fuel costs. Modernization of aircrafts has also been adopted to enable the company to reduce costs of distribution and transport; hence prices are set at low levels. Furthermore, Lufthansa Airlines offers customers an opportunity to choose their travel arrangements by offering different prices in different routes. This ensures that customers operate in their lowest cost routes. This is a form of price discrimination in geographical basis which ensures that all customers of different income levels meet their price limits.

Promotional Efforts

Promotion in Lufthansa Airlines takes place in various methods, mainly through advertising and publicity. This is done both online through the company’s website and in print media and physical displays. For instance, there is an exhibition in terminal 2 at Munich airport which reads, “Service is our tradition.” This publicity shows sixty photographs of the company throughout its history since 1995 (Lufthansa Airlines, 2014). The company’s website also has a media relations section which provides publicity and advertisements for the company’s products and services. The company’s online media library also has photos and footages that communicate the company’s products and services. Lufthansa’s advertisements have also been enhanced through the social media as the company engages its customers in social media, especially in USA branch. As billions of people use social media including facebook and twitter, Lufthansa has taken advantage of this to advertise its services to potential customers.

Distribution Strategy

The distribution strategy of the company involves direct selling distribution channel whereby the company’s staff receive bookings in its physical and online booking platforms. Passengers visit booking offices of the company or Lufthansa Airlines website where they book flights by indicating their country, language and destination (Lufthansa Airlines, 2014). Lufthansa system is used to record and track the bookings of passengers. The company’s global Lufthansa strategy is used to enhance easy booking by passengers. When passengers book for a flight, they pay either online using their cards or using cash in the company’s booking offices. The company then provides tickets as proof of payment to the passengers. This strategy is considered to be a direct selling distribution channel because the company’s staff and sales personnel engage directly with passengers by offering tickets and collecting payments from them.

 

References list

Lufthansa Airlines (2014). Business Segments. Accessed August 7, 2014 from             http://www.lufthansagroup.com/en/company/business-segments.html.

Hill, C. W. L., & Jones, G. R. (2012). Strategic management: An integrated approach. Mason, OH: South-Western Cengage Learning.

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